An Under-the-Radar Problem With Medicare and Medicaid That Few Are Talking About

By Markets Fool.com


Image source: Flickr user Ilmicrofono Oggiono.

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The Social Security program may get all the recognition, because of all entitlement programs it's one that pays out a tangible benefit on a monthly basis. But when it comes to ensuring the long-term health of more than 116 million Americans, we can't overlook the important roles that Medicare and Medicaid play.

The importance of Medicare and Medicaid
Speaking generally, Medicare is the program designed to help cover a majority of eligible medical costs for seniors aged 65 and older, whereas Medicaid is a health program put in place to provide medical access to low income individuals and their families. As you might imagine, both are critical and perhaps underappreciated in terms of what they do for a large number of Americans.

According to the Kaiser Family Foundation's "Medicare and Medicaid at 50" report, released in July 2015, a good chunk of Americans surveyed believe both programs are working well. Some 60% affirmed that Medicare was working well, and 50% believed Medicaid was working well. The remainder was made up of those who didn't believe the programs were working well and those who refused to answer or simply didn't know.

In spite of these modestly positive reviews, and the belief (especially when it comes to Medicare) that both programs are of personal importance, respondents also suggested that there could be long-term concern about these programs.

Specifically, 54% of respondents said they were either "not at all confident" or "not too confident" in Medicare's ability to provide the same level of benefits to future generations as it does for today's seniors. Conversely, just 12% felt "very confident." When asked if changes should be made to Medicare, roughly a quarter (27%) said it should essentially be left as is, while 68% said "changes need to be made to the Medicare program to keep it sustainable."

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In terms of Medicaid, 62% would prefer to leave it as is, but nearly a third (32%) of respondents suggested that Medicaid be altered to a block grant structure to give states more control over who and what services are covered.


Image source: Medicaid.gov.

An under-the-radar Medicare and Medicaid problem
On the surface, KFF's "Medicare and Medicaid at 50" report looks pretty straightforward: Americans are mostly happy and feel these are important programs, but quite a few worry about the future and would consider changing one or both programs. But dig deeper into KFF's report and a trend becomes apparent: Americans may not have as good an understanding of Medicare or Medicaid as we thought.

Think about it this way: if we don't have as good an understanding of both programs as we think, then how can we be sure we're truly satisfied with them or know what's best in terms of how to fix them for the long run? From another angle, if Americans don't fully understand the ins-and-outs of Medicare or Medicaid, it also means they may not be utilizing these programs to the fullest.

Let's take a look at a few cases in point.

Medicaid expansion confusion abounds
For example, KFF questioned survey-takers about whether or not their state had expanded its Medicaid program under the Affordable Care Act, or, as you probably better know it, Obamacare.

Image source: Flickr user Dave Hosford.

When Obamacare was initially signed into law in March 2010, it was deemed that all 50 states would be required to expand their Medicaid programs to include low-income individuals earning up to 138% of the federal poverty level, up from 100% of FPL. However, in 2012 the U.S. Supreme Court ruled 7-2 that states have the right to choose whether or not to expand. In total, 31 states have chosen to take federal money and expand their Medicaid programs, while the remainder have not. KFF sought to understand how knowledgeable consumers were about whether or not their state had expanded.

The results? Among persons living in states where Medicaid was expanded, just 42% were aware of it, whereas only 46% of people living in states that didn't expand were aware that their state chose not to participate. This basically means just over half of all survey-takers either didn't know, refused to answer, incorrectly answered the question regarding their state, or believed that all states had expanded coverage. It makes you wonder if this is one of the reasons why insurers have seen fewer enrollments than expected.

Shoulder shrugs on Medicare Part B premiums
OK, so this might not be as bad as more than half of the public being unaware of whether or not their state expanded Medicaid, but KFF also questioned survey-takers regarding their knowledge of Medicare Part B premiums.

Image source: Pixabay.

Specifically, KFF was curious how well Americans understood that while most consumers pay a standard Part B (i.e., medical/outpatient service premium) premium for Medicare, higher-income seniors pay more based on their income. Individuals earning less than $85,000 annually, and joint-filers with combined incomes below $170,000, won't owe any extra. However, earn above that mark and you could face a surcharge of as much as $268 per month! Per KFF's report, a high-income surcharge (of any amount) only affects about 6% of seniors.

The responses showed that just 30% of seniors were aware that high-income seniors pay a higher Part B premium than everyone else. Close to half (46%) said well-to-do seniors didn't pay any extra, and roughly a quarter (24%) simply didn't know or refused to answer.

Medicare and Medicaid have an education problem on their hands
Long story short, there's still a lot of work to do when it comes to educating the public about Medicare and Medicaid. Only when a solid majority of Americans fully understand these programs can they make more informed decisions about how they'll personally be affected.

How does this happen? First, it'd be nice to see an expanded effort by the Centers for Medicare and Medicaid Services to work with local and state governments to better educate the American public about these core health programs. It's in the CMS' best interests to get as many eligible people enrolled in Medicaid and Medicare as possible so they receive preventative care treatment early and often. Doing so could help reduce long-term healthcare costs by catching chronic conditions early before they become tough-to-treat and expensive.

On the other side of the coin, we need seniors who qualify for Medicare, and low-income Americans who'd be eligible for Medicaid, to seek out this knowledge on their own. Medicare.gov and Medicaid.gov are great sources of information if you've got questions on how Medicare or Medicaid works. Additionally, you can peruse a cheat sheet on Medicare I've recently compiled of 16 things you'll want to know.

A lack of consumer education is a pretty easy concern to fix on paper; it just requires consumers wanting to learn more and the CMS ensuring the information is easily accessible.

The article An Under-the-Radar Problem With Medicare and Medicaid That Few Are Talking About originally appeared on Fool.com.

Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.